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TERAGO Inc. Proxy Solicitation & Information Statement 2025
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Proxy Solicitation & Information Statement
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TERAGO
CONNECTIVITY POWERING CHANGE
TERAGO INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
AND
MANAGEMENT INFORMATION CIRCULAR
May 2, 2025
TERAGO CONNECTIVITY POWERING CHANGE
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Tuesday, June 3, 2025
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the “Meeting”) of TERAGO Inc. (the “Company”) will be held at the offices of Borden Ladner Gervais LLP, 22 Adelaide Street West, Bay Adelaide Centre, East Tower, 34th Floor, Toronto, Ontario, Canada, M5H 4E3 on June 3, 2025 at 1:00 p.m. (Eastern Daylight time) for the following purposes:
- to receive the consolidated audited financial statements of the Company for the financial year ended December 31, 2024, and the auditors’ report thereon (the “2024 Annual Financial Statements”);
- to fix the number of directors of the Company at six (6);
- to elect the directors of the Company;
- to re-appoint the auditors and to authorize the directors to fix their remuneration; and
- transact such other business as may properly be brought before the Meeting or any adjournment thereof.
Accompanying this Notice of Annual Meeting of Shareholders is: (i) the Management Information Circular, which provides additional information relating to the matters to be dealt with at the Meeting; (ii) a form of proxy; and (iii) 2024 Annual Financial Statements.
The Board of Directors of the Company has fixed April 29, 2025 as the record date for the Meeting. Any shareholder of record at the close of business on April 29, 2025 is entitled to notice of the Meeting and to vote the Common Shares registered in his or her name at that date on each matter to be acted upon at the Meeting.
Registered shareholders who are unable to attend the Meeting are requested to complete, date and sign the enclosed form of proxy and deliver or send it, in the envelope provided, to the attention of the Proxy Department of Odyssey Trust Company, the Company’s transfer agent, at Trader’s Bank Building, Suite 702, 67 Yonge Street, Toronto, ON M5E 1J8. Alternatively, you may vote by internet at https://login.odysseytrust.com/pxlogin and following the instructions on the website.
To be effective, a proxy must be received not later than May 30, 2025 by 1:00 p.m. (Eastern Daylight time), or in the case of any adjournment or postponement of the Meeting, not less than 48 hours, excluding Saturdays, Sundays and holidays, prior to the time of the adjournment or postponement, thereof. Late proxies may be accepted or rejected by the Chair of the Meeting in his or her discretion, and the Chair is under no obligation to accept or reject any particular late proxy.
Non-registered shareholders who receive these materials through their broker or other intermediary should complete and send the enclosed voting instruction form or form of proxy in accordance with the instructions contained therein or provided by their broker or intermediary.
By Order of the Board of Directors of TERAGO Inc.
Shaunik Katyal (signed)
General Counsel
May 2, 2025
ANNUAL MEETING OF SHAREHOLDERS
to be held on June 3, 2025
MANAGEMENT INFORMATION CIRCULAR
I. VOTING INFORMATION
The Company is not sending proxy-related materials in connection with the Meeting to registered shareholders or non-registered shareholders using the notice-and-access provisions set out in National Instrument 54-101 – Communication with Beneficial Owners of Securities of a Reporting Issuer (“NI 54-101”).
What am I voting on?
The holders of the common shares (the “Common Shares”) in the capital of TERAGO Inc. (“TERAGO” or the “Company”) are voting on (i) the fixing of the number of directors of the Company (the “Board”) at six (6); (ii) the election of directors to the Board of Directors; and (iii) the re-appointment of KPMG LLP as auditors for the Company and authorizing the directors to fix the remuneration of the auditors.
Who is entitled to vote?
You are entitled to vote if you were a holder of Common Shares as of the close of business on April 29, 2025 (the “Record Date”). Each Common Share entitles its holder to one vote on those items of business identified in the Notice of Annual Meeting of Shareholders.
How do I vote?
If you are a registered holder, you may vote online ahead of the Meeting, in person at the Meeting or you may sign the enclosed form of proxy appointing the persons named in the proxy or some other person you choose, who need not be a shareholder, to represent you as proxy holder and vote your Common Shares at the Meeting.
There are two ways that you can vote your Common Shares if they are held by your nominee (a bank, trust company, securities broker, trustee or other). As required by Canadian securities legislation, you will have received from your nominee either a request for voting instructions or a form of proxy for the number of Common Shares you hold. Each nominee has its own signing and return instructions, which you should follow carefully to ensure your Common Shares will be voted.
Since the Company has limited access to the names of its non-registered Shareholders, if you plan on attending the Meeting, the Company may have no record of your Common Share holdings or of your entitlement to vote unless your nominee has appointed you as proxy holder. Therefore, if you wish to vote at the Meeting, please insert your own name in the space provided on the request for voting instructions or form of proxy and return same by following the instructions provided. Do not otherwise complete the form as your vote will be taken at the Meeting.
These securityholder materials are being sent to both registered and non-registered owners of the securities. Please return your voting instructions as specified in the request for voting instructions. The Company also intends to pay for an intermediary to deliver the proxy-related materials and related forms to objecting non-registered Shareholders.
Who is soliciting my proxy?
The enclosed form of proxy is being solicited by or on behalf of management of the Company and the associated costs will be borne by the Company. The solicitation will be primarily by mail, but proxies may also be solicited personally, by advertisement or may also be made by telephone, in writing or in person by the directors, officers or
employees of the Company or such other persons as may be designated by the Company for such purpose without special compensation, or by the Company’s transfer agent, Odyssey Trust Company.
What if I sign the form of proxy enclosed with this Management Information Circular?
Signing the enclosed form of proxy gives authority to Daniel Vucinic, Chief Executive Officer or Rajneesh Sapra, Chief Financial Officer of the Company, or to another person you have appointed, to vote your Common Shares at the Meeting.
Can I appoint someone else to vote my Common Shares?
Yes. Write the name of this person, who need not be a Shareholder, in the blank space provided in the form of proxy.
It is important to ensure that any other person you appoint is attending the Meeting and is aware that he or she has been appointed to vote your Common Shares. Proxyholders should, upon arrival at the Meeting, present themselves to a representative of Odyssey Trust Company.
What do I do with my completed proxy?
Return it to the Company’s transfer agent, Odyssey Trust Company, either by entering your votes online using the instructions you received, in the envelope provided via mail, so that it arrives not later than 1:00 p.m. (Eastern Daylight time) on Friday, May 30, 2025, at least two business days prior to the date of the Meeting or any adjournment or postponement thereof. This will ensure your vote is recorded.
If I change my mind, can I take back my proxy once I have given it?
Yes. If you change your mind and wish to revoke your proxy, prepare a written statement to this effect. The statement must be signed by you, or your attorney as authorized in writing or, if the shareholder is a corporation, under its corporate seal or by an officer or attorney of the corporation duly authorized. This statement must be delivered to the General Counsel of the Company at the following address no later than 1:00 p.m. (Toronto time) on Friday, May 30, 2025:
Shaunik Katyal
General Counsel
TERAGO Inc.
55 Commerce Valley Drive West, Suite 800
Thornhill, ON L3T 7V9
How will my Common Shares be voted if I give my proxy?
The persons named in the voting instruction form or form of proxy must vote for or against or withhold from voting your Common Shares in accordance with your directions, or you can let your proxyholder decide for you. In the absence of such directions, proxies received by management will be VOTED FOR the election of directors, VOTED FOR the re-appointment of the auditors and to authorize the directors to fix their remuneration, each as more specifically set out in this Management Information Circular.
What if amendments are made to these matters or if other matters are brought before the meeting?
The person named in the form of proxy will have discretionary authority with respect to amendments or variations to matters identified in the Notice of Annual Meeting of Shareholders and with respect to other matters that may properly come before the Meeting.
As at the date of this Management Information Circular, management of the Company are not aware of any such amendment, variation or other matter expected to come before the Meeting. If any other matters properly come before
the Meeting, the persons named on the enclosed form of proxy will vote on them in accordance with their best judgment.
How many Common Shares are entitled to vote?
As of April 29, 2025, 20,034,329 Common Shares of the Company were outstanding, each carrying the right to one vote for each Common Share held.
The Board of Directors of the Company has fixed April 29, 2025 as the record date (the "Record Date") for the Meeting. Any shareholder of record at the close of business on the Record Date is entitled to vote the Common Shares registered in his or her name at that date on each matter to be acted upon at the Meeting.
To the knowledge of the directors and senior officers of the Company, no one person or entity beneficially owned, directly or indirectly, or exercised control or direction over, Common Shares carrying more than 10% of the voting rights attached to the Common Shares, other than as disclosed below:
| Shareholder | Approximate Number of Common Shares Beneficially Owned, Controlled or Directed | Percentage of Outstanding Common Shares |
|---|---|---|
| Cymbria Corporation, acting at the direction of its portfolio manager, EdgePoint Investment Group Inc. | 4,706,715^{1} | 23.49% |
1Based on most recently available public filing made by the shareholder as of April 29, 2025.
How will these matters be decided at the Meeting?
Each matter specified in this Management Information Circular to be brought before the Meeting will be determined by a majority of votes cast, by proxy or at the Meeting, on the matter.
Who counts the votes?
The Company's transfer agent, Odyssey Trust Company, counts and tabulates the proxies and votes. This is done independently of the Company to preserve the confidentiality of individual votes. Proxies are referred to the Company only in cases where a shareholder clearly intends to communicate his or her position to management or as necessary to comply with the requirements of applicable law.
If I need to contact the transfer agent, how do I reach them?
For general enquiries, you can contact the transfer agent by mail at:
Odyssey Trust Company
Trader's Bank Building, Suite 702
67 Yonge Street
Toronto, ON M5E 1J8
or by e-mail at:
[email protected]
or by telephone toll free at:
1-888-290-1175
(or outside of Canada and U.S. 1-587-885-0960)
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II. BUSINESS OF THE MEETING
1. Financial Statements
The consolidated audited financial statements of the Company for the year ended December 31, 2024 together with the auditors' report thereon (the “2024 Financial Statements”) and related Management’s Discussion and Analysis (“MD&A”) are available on the Company’s website www.terago.ca and on SEDAR at www.sedarplus.ca under the Company’s name.
2. Number of Directors
The articles of the Company (the “Articles”) provide that the number of directors shall be a minimum of one and a maximum of ten. The Board is currently composed of seven (7) directors. It is proposed that the number of directors to be elected to the Board at the Meeting be fixed as six (6).
3. Election of the Board of Directors
The number of directors to be elected at the Meeting is six (6). Under the by-laws of the Company, directors of the Company are elected annually. Each elected director will hold office until the next annual meeting or until the successor of such director is duly elected, unless such office is earlier vacated in accordance with the by-laws of the Company.
Unless otherwise instructed, the persons designated in the form of proxy intend to VOTE FOR the election of the proposed nominees standing for election as set out below, each of whom has been a director since the date indicated below opposite his or her name. If for any reason at the time of the Meeting any of the proposed nominees is unable to serve and unless otherwise specified, it is intended that the persons designated in the form of proxy will vote in their discretion for a substitute nominee or nominees.
Pursuant to a subscription agreement dated April 14, 2021, between the Company and Cymbria Corporation, acting at the direction of its portfolio manager, EdgePoint Investment Group Inc. (“Cymbria”), the Company granted certain nomination rights to Cymbria (the “Nomination Right”) whereby it will have the right to specify an individual to be nominated to the Board so long as Cymbria owns more than 10% of the outstanding Common Shares. Cymbria currently has ownership of, or control or direction over 4,706,715 Common Shares, representing approximately 23.49% of the outstanding Common Shares. Cymbria has designated Mr. Pinnes as its “Board Designee” pursuant to such Nomination Right and the Company has nominated Mr. Pinnes to stand as a nominee for election at the Meeting.
All nominee directors are independent other than Mr. Daniel Vucinic who has been appointed Chief Executive Officer of the Company effective June 12, 2023.
The Company has adopted a majority voting policy pursuant to which, notwithstanding the Company’s by-laws and the Canada Business Corporations Act, if any director nominee receives a greater number of votes “withheld” from his or her election than votes “for” such election, then, provided the election is uncontested in accordance with the policy, such director nominee must following the receipt of the final scrutineer’s report relating to such meeting, immediately submit to the Board his or her offer of resignation, which will take effect only upon the acceptance of such resignation by the Board. The Board, will, within 90 days following such meeting of shareholders, determine either to accept or not accept the subject director’s offer to resign, and the Board will cause the Company to promptly disclose publicly, via press release, the Board’s determination, including, in cases where the Board has determined not to accept the resignation, the reasons therefor. It is generally expected that the Board will accept such resignation, absent exceptional circumstances.
The following sets forth information with respect to each person proposed to be nominated for election as director, including the number of Common Shares of the Company owned beneficially, directly or indirectly, or over which control or direction is exercised by such person on April 29, 2025.
| Name and Place of Residence | Director Since | Principal Occupation | Common Shares(1) |
|---|---|---|---|
| KENNETH CAMPBELL(2)(4) | |||
| London, England | August 5, 2020 | Chief Executive Officer, PLAY,a part of ILIAD group | 194,884 |
| MARTIN PINNES(3)(4)(6) | |||
| Ontario, Canada | June 29, 2021 | Chief Operating Officer, Shared Tower Inc. | 228,208 |
| PIETRO CORDOVA(5)(6)(8) | |||
| Rome, Italy | June 14, 2022 | Operating Partner, Ficom Leisure | 51,209 |
| TINA PIDGEON(6)(7)(8) | |||
| New Jersey, USA | June 12, 2023 | Principal, Tina Pidgeon Strategies | 36,985 |
| JAMES A. WATSON(8) | |||
| Ontario, Canada | June 12, 2023 | Corporate Director | 26,106 |
| DANIEL VUCINIC | |||
| Ontario, Canada | June 12, 2023 | Chief Executive Officer, TERAGO Inc. | 64,417 |
Notes:
(1) The information as to Common Shares beneficially owned or controlled or directed, not being within the knowledge of the Company, has been furnished by the respective nominees individually.
(2) Chairperson of the Board of Directors
(3) Chair of the Compensation Committee.
(4) Member of the Compensation Committee.
(5) Chair of the Audit Committee.
(6) Member of the Audit Committee.
(7) Chair of the Corporate Governance Committee.
(8) Member of the Corporate Governance Committee.
Certain biographical information about each of the proposed nominees for election as directors of the Company is set forth below:
Kenneth Campbell
Mr. Campbell is the Chairperson of the Board of Directors of the Company. Mr. Campbell is the Chief Executive Officer of PLAY, a part of ILIAD group, the fifth largest telecom group in Europe. From 2019 to 2024 Mr. Campbell was a Partner with Paris-based Performance Management Partners (PMP Strategy). He was also previously a Non-Executive board member of South African fibre operator, Octotel. With more than 25 years of hands-on executive experience with several major mobile operators, Mr. Campbell has served in a range of senior leadership roles with telecom operators in North America, Europe, and North Africa. He was the Directeur General for INWI in Morocco and co-founded Mobile Klinik, Canada's leading smartphone and tablet repair network. Prior to this, Mr. Campbell served as CEO of Ooredoo in Tunisia, CEO of Wind Mobile in Canada, CEO of Bite in Lithuania, and Latvia, and held commercial and marketing positions for Vodafone, Ooredoo, and Orascom. Mr. Campbell holds an MBA from the London Business School and a Bachelor of Arts (Honours Economics) from Carleton University in Ottawa, Canada.
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Martin Pinnes
Mr. Pinnes is a Director of the Company and is the Chief Operating Officer of Shared Tower, an Oakville-based developer of communication infrastructure assets. From 2019 to 2021, Mr. Pinnes served as Vice President of Finance and Corporate Development at FlexNetworks, a Toronto-based telecommunications provider that serves Winnipeg, key population centres in Saskatchewan, and Ottawa with a fibre-optic and wireless network, addressing a diverse range of customer types. From 2018 to 2019, Mr. Pinnes served as Vice President at Treeline Capital Partners, a Denver-based firm focused on the creation of investment platforms in real estate, energy and communications. Prior to Treeline Capital Partners, Mr. Pinnes was a Senior Portfolio Manager at the Canada Pension Plan Investment Board, with a focus on public equities in the telecommunications and media industries across North America, Europe and Latin America. Mr. Pinnes has extensive experience investing across the capital structure in public and private telecommunication businesses and has served on multiple Boards of private companies. Mr. Pinnes graduated from Colgate University with degrees in Mathematical Economics and Psychology.
Pietro Cordova
Mr. Cordova is a Director of the Company and is an Operating Partner at Ficom Leisure, a boutique advisory firm providing corporate, financial, and business advisory services focusing on strategic planning, organic and M&A driven growth, management/generational changes, capital structure optimization and restructuring. Mr. Cordova is the former CEO and member of the Board of Directors of (i) Veon Wholesale Services a wholesale telco company with approx. Euro 1 billion revenues, providing centralized provisioning, commercial, technology and value-added services for the 14 OpCos of the Veon Group worldwide and (ii) Wind Mobile in Canada (now trading as Freedom Mobile). Prior to this, Mr. Cordova was the Deputy CFO for Wind in Italy, a leading, €6bn revenue telco operator with over 35mln customers (wireline and wireless). He started his career in banking, subsequently moving to Telecom Italia (now trading as TIM) as Head of South America in the International Finance Dept, subsequently moving to the Atlantia Group (toll highways) as Finance Director. Mr. Cordova has extensive experience in growing and streamlining companies operating in highly regulated and competitive environments. Mr. Cordova, a Canadian and Italian citizen, holds a University Degree in Business Administration and Finance from "La Sapienza" University, Rome.
Tina Pidgeon
Ms. Pidgeon is a Director of the Company and is the Principal of Tina Pidgeon Strategies. Ms. Pidgeon a 30-year veteran of the telecom and tech industry and recognized leader in telecommunications policy development and broadband infrastructure deployment, advises clients on business transformation, executable advocacy strategies, and organizational design. Ms. Pidgeon previously spent 17 years with GCI Communication Corp. (GCI), an Alaska telecommunications company providing statewide broadband and wireless services. As GCI's General Counsel, Chief Compliance Officer, and SVP, Governmental Affairs for a decade, she directed the company's legal, policy, regulatory, communications, compliance, and risk operations, and applied her DC-based expertise in broadband deployment, universal service policy, and wireless and video service matters. During that time, she served on the company's senior executive team, which guided significant wireless transactions and major infrastructure deployments across Alaska, and managed broadband, wireless, video, and traditional telecom service businesses. Ms. Pidgeon subsequently served as Special Advisor to the CEO, and earlier as Vice President of Federal Regulatory Affairs. Prior to her roles with GCI., Ms. Pidgeon was an associate with the law firm of Drinker Biddle & Reath LLP (now Faegre Drinker) in Washington, D.C., where she specialized in regulatory policy and compliance in the telecommunications industry. Ms. Pidgeon also serves as a director of AP&T (Alaska Power and Tel), chairing the Governance and Nominating Committee; the American Oncologic Hospital, a comprehensive cancer center in Philadelphia, and the Fox Chase Cancer Center Foundation, chairing the Institutional Advancement Committee, and previously of Nova, an Icelandic mobile wireless and broadband company. Ms. Pidgeon is a graduate of the University of Virginia School of Law and the University of Notre Dame, and her efforts, experience, and leadership have been recognized by many industry and professional organizations.
James A. Watson
Mr. Watson is a Director of the Company. Mr. Watson served as the 56th mayor of the city of Ottawa, Ontario from 2010 to 2022. Prior to this, Mr. Watson served as Member of Provincial Parliament for the Ottawa West-Nepean riding and was appointed as Minister of Consumer and Business Services in 2003. In addition, he became Ontario's
first Minister of Health Promotion in 2005 and Minister of Municipal Affairs in 2007. From 2000-2003, Mr. Watson served as President and CEO of the Canadian Tourism Commission, a Federal Crown Corporation designed to market Canada domestically and internationally as a tourism destination. Previously, Mr. Watson also served as an Ottawa city councilor from 1991 to 1997, and as mayor from 1997 to 2000. Mr. Watson has served on the board or as honorary chair of several community organizations including the Riverside Hospital, the National Arts Centre, the Central Canada Exhibition Association, the Christmas Exchange of Ottawa, and the Forum for Young Canadians. He also served as chair of the United Way's 2002 campaign. Mr. Watson is the recipient of several honours and awards for his previous and continued service to the community, including the Queen's Diamond Jubilee Medal. Mr. Watson graduated from Carleton University with a degree in Mass Communications.
Daniel Vucinic
Mr. Vucinic is Director and Chief Executive Officer of the Company. With three decades of experience across senior management roles throughout the technology sector, Mr. Vucinic brings a wealth of leadership and operational excellence experience. He most recently served as Chief Operating Officer of Centrilogic Inc., a global provider of IT transformation solutions, where he led all operations functions to support customers' end-to-end cloud and digital transformation journeys and drove significant enterprise value creation. Mr. Vucinic also served in several executive roles at Zayo and Allstream, two global communications companies, where he also played a pivotal role in driving significant enterprise value creation through revenue growth and optimization. Prior to his tenure at Allstream, he held senior leadership positions at AT&T Canada and Unitel. Mr. Vucinic is a Professional Engineer and holds a Bachelor of Applied Science, Engineering from the University of Toronto.
Corporate Cease Trade Orders, Bankruptcies, Penalties or Sanctions
To the knowledge of the Company (based on information furnished by the directors), except as noted below, none of the director nominees, nor any personal holding company thereof owned or controlled by them: (a) is, as at the date of this Management Information Circular, or has been, within the 10 years before the date of this Management Information Circular, a director, chief executive officer or chief financial officer of any company that: (i) was subject to a cease trade order, an order similar to a cease trade order or an order that denied the relevant company access to any exemption under securities legislation that was in effect for a period of more than 30 consecutive days (each an "Order") that was issued while the person was acting in the capacity as director, chief executive officer or chief financial officer; or (ii) was subject to an Order that was issued after the person ceased to be a director, chief executive officer or chief financial officer and which resulted from an event that occurred while that person was acting in the capacity as director, chief executive officer or chief financial officer; (b) is, as at the date of this Management Information Circular, or has been within 10 years before the date of this Management Information Circular, a director or executive officer of any company that, while that person was acting in that capacity, or within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets; or (c) has, within the 10 years before the date of this Management Information Circular, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of the director nominee or director.
Kenneth Campbell - Director of NuRAN Wireless Inc. - As announced on May 2, 2023, NuRAN Wireless Inc. ("NuRAN") had been delayed in meeting the deadline for its annual filings and as a result, NuRAN applied for a management cease trade order ("MCTO") under National Policy 12-203 - Management Cease Trade Orders ("NP 12-203"), which was granted by the BCSC. As per NuRAN's press release, the MCTO did not affect the ability of shareholders to trade their securities and the general investing public will continue to be able to trade in NuRAN's common shares. However, NuRAN's CEO and CFO were not allowed to trade the NuRAN's common shares until such time as the Annual Filings were filed and all continuous disclosure requirements were satisfied by NuRAN, and the MCTO has been revoked by the BCSC.
To the knowledge of the Company, none of the director nominees, nor any personal holding company thereof owned or controlled by them: (i) has been subject to any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory
authority; or (ii) has been subject to any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable investor in making an investment decision.
4. Re-Appointment of Auditor
At the Meeting, shareholders will be requested to re-appoint KPMG LLP as auditors of the Company, to hold office until the next annual meeting of shareholders or until their successors are appointed, and to authorize the Board of Directors to fix their remuneration.
Unless otherwise instructed, the persons designated in the form of proxy intend to VOTE FOR the re-appointment of KPMG LLP as auditors of the Company to hold office until the next annual meeting of shareholders or until their successors are appointed and for the resolution authorizing the Board of Directors to fix the remuneration of the auditors.
5. Other Matters:
The Company knows of no other matters to be submitted to the shareholders at the Meeting. If any other matters properly come before the Meeting, it is the intention of the persons named in the enclosed form of proxy to vote the shares they represent in accordance with their judgement on such matters.
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III. STATEMENT OF EXECUTIVE COMPENSATION
- Compensation Discussion and Analysis
The following discussion described the significant elements of our executive compensation program, with particular emphasis on the process for determining compensation payable to the Named Executive Officers of the Company. The Named Executive Officers are:
- Daniel Vucinic, President and Chief Executive Officer
- Rajneesh Sapra, Chief Financial Officer
- Osman Mohamednur, Vice President, Engineering & Operations
- May Daou, Vice President, Revenue Management
- Fadi Joseph, Vice President, Sales & Marketing
(collectively, the “Named Executive Officers” or “NEOs”).
Compensation Philosophy
The Company is a dynamic organization which has recently made strategic acquisitions and has transitioned the Company into a multi-product IT services company focused on securely managing its customers’ data flow. It currently provides businesses across Canada with network connectivity services. The level of talent required to drive the business and to carry out its strategy while competing with large, well-established organizations and brands can be challenging to develop and/or recruit. The Compensation Committee of the Board (the “Compensation Committee”) and the Board view the recruitment and retention of top industry talent as a key corporate priority in the seamless operation and performance of the Company. In order to accomplish its goals and to ensure that the compensation program is consistent with its direction, strategy, stated mission and goals, the Company is committed to a “pay for performance” culture. The Compensation Committee, the Board and management place significant emphasis on the impact of its executive compensation and total rewards program.
The executive compensation and total rewards program is intended to:
- provide competitive compensation vehicles that are consistent with the Company’s business plan, strategy, financial objectives and operating performance;
- attract highly qualified individuals necessary to expand the business;
- retain and motivate executives to achieve higher levels of performance and be appropriately rewarded for that effort;
- emphasize a “pay-for-performance” variable incentive structure that rewards individual, team and corporate performance, while supporting company goals, with a view toward increasing Shareholder value; and
- align the interests of shareholders and executives.
The Company is committed to growing, developing and enriching the careers of the top talent within the Company. In addition, it is widely recognized that the success of the organization internally and in the marketplace is driven by the success and leadership of the executive team. As such, there is considerable time, energy and focus committed to the talent and succession review and planning process. While each executive is assessed on their own personal contributions, the accomplishments of the executive group as a team is viewed with great importance as it drives the business, culture and shareholder value.
The Compensation Committee’s decisions about executive compensation policies and practices are made within the context of the Company’s goals and strategies. To this end, the Compensation Committee’s mandate is to oversee management in the attraction and retention of talented and highly motivated people that will excel in a fast-paced and challenging environment.
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Compensation Committee
The Compensation Committee provides oversight of overall compensation philosophy, policies, practices and programs. The Compensation Committee works closely with management as well as external compensation consulting firms from time to time to ensure they are knowledgeable regarding the most current market data and trends. The Compensation Committee makes recommendations to the Board concerning the level, nature and mix of compensation payable to the executive officers of the Company. This review includes the Chief Executive Officer and the other NEOs. The Compensation Committee also makes recommendations to the Board concerning annual incentive levels, executive perquisites, short-term incentives and long-term incentives, as well as compensation for the directors.
The Committee currently consists of Martin Pinnes (Chair), Kenneth Campbell and Frederick W. Hrenchuk, each of whom is "independent" within the meaning of the corporate governance disclosure rules adopted by the Canadian Securities Administrators. The Board as a whole reviews the recommendations of the Compensation Committee and gives final approval on compensation matters for the Company's executive officers, as well as on major policy changes related to remuneration.
The Board is of the view that the members of the Committee collectively have the relevant skills and experience necessary to enable the Committee to make decisions as to the suitability of the Company's compensation policies and practices. All committee members have a thorough understanding of policies, principles, and governance related to human resources and executive compensation, and the necessary financial acumen to apply to the evaluation of executive compensation programs. They have acquired this knowledge through direct experience in existing and prior roles that is relevant to their responsibilities in executive compensation. This ensures a strong overlap and broader perspective related to the organization's financial results, risk profile, and compensation outcomes. For more information on the occupations, skills, experience, and independence of each Committee member, please refer to each director's biographical information contained in this Management Information Circular.
Input from Management
The Compensation Committee also meets with the Chief Executive Officer and other members of management and will consider management recommendations regarding:
- Executive compensation, including base salary, target bonus, long-term incentives and perquisites;
- Short-term incentive design and metrics;
- Long-term incentive performance metrics; and
- Review of corporate and individual performance achievement.
Risk Assessment and Oversight
The Company has conducted an assessment of its compensation programs, policies and practices for its executives relative to risk and whether they create a reasonable likelihood of a material adverse effect on the Company. Based on this assessment, which also considered the control environment and approval processes in place, the Compensation Committee has not identified any risks arising from the Company's compensation policies and practices that would be likely or would reasonably cause a material adverse effect on the Company. The Compensation Committee believes that the Company's executive compensation program encourages the taking of risks that are reasonable, appropriate and properly managed, while not encouraging management to take unreasonable risks relating to the Company's business. Executives are not rewarded for taking excessive or inappropriate risks or those which would have a material adverse effect on the Company for the following reasons: (i) the total compensation package consists of both base (fixed) and variable compensation; (ii) the performance metrics for variable compensation include key strategic objectives for the Company, including revenue, net monthly recurring revenue, end of year cash position and Adjusted EBITDA; (iii) the option based awards, restricted share units and performance-based restricted share units are subject to three-year vesting periods, reducing incentives on the part of executives to any imprudent short-term risks; and (iv) the Company has strict internal financial controls.
2. Components of Executive Compensation
The mix of the Company's executive compensation and total rewards structure include:
- base salary;
performance-based annual incentive;
long-term incentive plans; and
executive benefits and perquisites.
In determining the appropriate mix of pay for each NEO, the Compensation Committee considers the most recent benchmarking data available, as well as the experience, skills, qualifications, ability, future potential, retention risk and overall performance of each individual. The Compensation Committee’s due diligence in determining the pay mix includes thorough analysis of various scenarios and the impact on each pay lever.
Base Salary
Annual base salaries for the NEOs are established at levels which are designed to be competitive within the Canadian marketplace. Base salaries are determined following an internal assessment and external review. Internally, the executive officer’s individual performance, experience, scope and responsibility, as well as impact of position with the Company is assessed. Externally, a market benchmarking review is undertaken periodically, which considers comparable companies.
On an annual basis, the Compensation Committee reviews and makes recommendations to the Board concerning the base salaries payable to the NEOs.
Annual Incentives
Annual incentives provide the executive with the opportunity to earn cash incentives based on the achievement of pre-established performance goals approved annually by the Board. The allocation of annual incentives to the executive officers is determined annually by the Board based on recommendations from the Compensation Committee.
The following table outlines the minimum, target and maximum annual incentive for each NEO in 2024, as a percentage of the executive’s base salary:
| NEO Name | Minimum Annual Incentive (% of salary) | Target Annual Incentive (% of salary) | Maximum Annual Incentive (% of salary) |
|---|---|---|---|
| DANIEL VUCINIC^{(1)} | |||
| President & Chief Executive Officer | 0% | 75% | 75% |
| RAJNEESH SAPRA^{(2)} | |||
| Chief Financial Officer | 0% | 54.54% | 54.54% |
| OSMAN MOHAMEDNUR | |||
| Vice President, Engineering & Operations | 0% | 40% | 40% |
| MAY DAOU^{(3)} | |||
| Vice President, Revenue Management | 0% | 20%^{(3)} | 20%^{(3)} |
| FADI JOSEPH^{(4)} | |||
| Vice President, Sales & Marketing | 0% | 31.25% | 31.25% |
Notes:
(1) Mr. Vucinic was appointed President and Chief Executive Officer of the Company, effective June 12, 2023.
(2) Mr. Sapra was appointed Chief Financial Officer of the Company effective April 1, 2024.
(3) Ms. Daou was promoted from her role as Senior Director, Solution Architecture and Customer Success to Vice President, Revenue Management effective April 1, 2024. Prior to April 1, 2024, Ms. Daou was not a Named Executive Officer. In addition to the target annual incentive, Ms. Daou is also entitled to up to 20% of her base salary in sales bonus based on new revenue bookings.
(4) Mr. Joseph joined the Company on November 3, 2023 and was appointed as Vice President, Sales & Marketing on November 20, 2023. In addition to the target annual incentive, Mr. Joseph is also entitled to up to 93.75% in sales bonus based on new revenue bookings.
The annual incentive plan includes corporate performance metrics against which all executives are measured. In addition, and in alignment with the “pay for performance” culture, each NEO has measurable and individual performance goals, specific to their functional area of responsibility. In accordance with the terms of the Company’s 2024 Annual Incentive Program for NEOs, if a corporate performance measure is achieved, 100% of the target award
value for that measure is paid to the executive. A stretch payment for achievement above a particular metric may also be payable for certain metrics.
Each year, the Board determines the performance measures to be used for awarding annual cash incentives and the various weightings to be applied to those criteria. Corporate performance measures and weightings for the 2024 Annual Incentive Program for NEOs consisted of:
| Metric | Target(1) | Weight |
|---|---|---|
| Net Monthly Recurring Revenue (MRR) | $116,000 | 25% |
| Adjusted EBITDA | $4,000,000 | 50% |
| Cash Flow from Operations | $2,750,000 | 25% |
Notes:
(1) Each corporate target is independent of each other.
The Compensation Committee reviews the actual financial and operational results against the previously approved annual targets to determine the recommended annual incentive payments. In 2024, the corporate performance achievement for eligible NEOs was 47.25% of target. Certain of the performance metrics and targets are based on non-IFRS financial measures such as “Adjusted EBITDA” and “Net MRR” which do not have a standard meaning and may not be a reliable way of comparison as against other companies. The Company calculates certain of these performance metrics and targets either from financial figures disclosed in its 2024 Financial Statements and MD&A or through internally tracked financial figures. Non-IFRS financial measures such as “Adjusted EBITDA” are identified in the MD&A and are reconciled back to IFRS financial figures.
Long Term Incentive Plans
The Compensation Committee believes that long term incentive awards should comprise a large portion of the total compensation package for executive officers, which is consistent with market practice and the corporate executive compensation and total reward philosophy. Ultimately, the goal of this component of the compensation mix is to:
- Attract and retain high performing executives - Long-term incentives should be competitive, have upside potential and be regarded by participants as being fair and appropriate.
- Alignment with Shareholders - Long-term incentives need to reward value creation that will benefit shareholders.
- Focus and Motivate - Long-term incentives should reward for performance with a focus on continuous improvement. The program should drive and increase executive engagement.
The Company utilizes both its Share Option Plan and its RSU Plan as long-term incentive vehicles for executive officers. The Compensation Committee makes option, RSU and PSU grant recommendations to the Board based on the above noted goals. Such grants are expected to be made in the future on a periodic basis, at the discretion of the Compensation Committee and based on performance in connection with the review of an executive officer’s compensation package. Grants under these long-term incentive plans may also be made upon hire or promotion and as special recognition for extraordinary performance.
Share Option Plan
As part of the Company’s long-term incentive program, the Company has adopted the Share Option Plan, pursuant to which the Board of Directors may in its discretion grant stock options (“Options”) from time to time to employees, directors and officers of the Company. Options are intended to retain and motivate recipients, provide them an opportunity to acquire an increased share interest in the Company, and ultimately align their long-term interests with those of shareholders and the Company’s objectives.
The Share Option Plan is administered by the Board of Directors. Options are not transferable. If a participant’s employment is terminated without cause, all vested options may be exercised within the shorter of 30 days or the balance of the option’s term, and any unvested options will be cancelled. If a participant voluntary resigns from their
12
employment, all vested options may be exercised within the shorter of 30 days or the balance of the option's term, and any unvested options will be cancelled. If a participant's employment is terminated for cause, all options, vested and unvested, will be immediately cancelled.
The exercise price of any Option granted under the Share Option Plan is the closing price per share of a board lot of Common Shares traded through the TSX on the grant date ("market price"). Unless otherwise determined by the Board of Directors, options will expire ten years after the date of grant, and will generally vest over three years in equal tranches on each anniversary date following the grant date. In lieu of paying the exercise price, an optionholder may elect to exercise their Options and acquire such number of Common Shares on a "cashless basis", determined by subtracting the exercise price from the market price of the Common Shares as of the date of exercise, multiplying the difference by the number of Common Shares in respect of which the Option was otherwise being exercised and then dividing that product by the market price of the Common Shares as of the date of exercise.
All options under the Share Option Plan will vest immediately on a change of control of the Company. Any option granted under the Share Option Plan that expires or is cancelled without having been fully exercised may be subject to a future Option grant. If any Option expires during or within 10 days after the last day of a black-out period during which the policy of the Company prevents a holder from trading in the Common Shares, then the expiry date for such options will be extended to the last day of such 10-day period. The fair value attributable to each Option on the grant date is determined under the Black-Scholes option pricing model using various assumptions on expected life of the Option, the current risk-free rate, the expected dividend yield and volatility attributed to the underlying Common Shares.
The Share Option Plan currently provides for a limit on the participation of "insiders" (as defined under TSX rules) such that the number of Common Shares: i) issued to insiders within any one-year period, and ii) issuable to insiders at any time under the Share Option Plan, or when combined with all of the Company's other security based compensation arrangements (including the RSU Plan and Directors' Share Compensation Program), cannot exceed 10% of the Company's total issued and outstanding Common Shares, respectively.
Under the Share Option Plan, the Board may, without shareholder approval:
(a) make non-material and/or minor amendments to the terms of the Plan that are of a "housekeeping nature";
(b) change the vesting terms of the Options; or
(c) suspend the Plan in whole or in part and may at any time terminate the Plan.
Other amendments to the Share Option Plan will be subject to receipt of shareholder approval, including in the case of: (i) any amendment to the Share Option Plan's amendment provision itself; (ii) any increase in the maximum number of Common Shares reserved and issuable under the Plan; (iii) any reduction in the exercise price to below market price at the time of grant, or to reduce the exercise price of an Option after grant; (iv) the extension of the expiry date of an Option; (v) an amendment or remove or to exceed the Insider Participation Limit; or (vi) any matters or amendment that may require shareholder approval under applicable laws or TSX rules.
RSU Plan
The RSU Plan was established to retain and motivate employees and officers of the Company and to promote a greater alignment of interests between these individuals and the shareholders of the Company. As part of the Company's long-term incentive program, the RSU Plan gives the Company flexibility in delivering a mix of executive compensation and total rewards. See "Components of Executive Compensation" for additional information.
Both restricted share units ("RSUs") and performance share units ("PSUs") (each referred to as a "Unit") may be granted under the RSU Plan. The fair value attributable to each Unit on the grant date is the closing price of each Common Share on date of grant as quoted on the TSX. RSUs generally vest based on time and a holder of RSUs will generally not be entitled to receive Common Shares and/or a cash payment until the holder has held the corresponding RSUs for a specified period of time. PSUs on the other hand generally vest based on both time and achievement of certain performance metrics over a performance period as determined by the Board. The achievement against such metrics will affect the aggregate number of Units that ultimately vest for the holder and would be a fraction of the
13
original number of Units granted for any underachievement, or a multiple of the original number of Units granted for an overachievement.
RSUs and PSUs generally have a maximum vesting period of three years and, unless stipulated otherwise under agreement with the holder or employee, will vest if there has been continuous employment by an employee until the vesting date. RSUs and PSUs are granted to eligible employees and officers based on individual performance, potential and market competitiveness.
Vested RSUs and PSUs entitled participants to receive upon settlement, at the discretion of the Company: (i) cash equal to the market value of the equivalent number of Common Shares, (ii) Common Shares delivered to the holder through the purchase of such Common Shares on the open market, (iii) Common Shares delivered to the holder through the issuance of Common Shares from treasury, or (iv) a combination of any of the foregoing. “Market value” on a particular date is defined in the RSU Plan as the arithmetic average of the closing price of the Common Shares traded on the TSX for the five trading days on which a board lot was traded immediately preceding such date.
There is an acceleration of vesting of RSUs and PSUs in the event of a change of control transaction involving the Company.
At the Company’s annual and special meeting of shareholders held on June 20, 2019, shareholders approved a resolution to amend the RSU Plan to reserve and set aside for issuance under the plan, an aggregate of 300,000 Common Shares to allow for the treasury issuance of Common Shares to settle vested RSUs and PSUs (the “RSU Plan Reserve”).
There is no maximum as to the number of Units issuable to a participant of the Plan within any one-year period nor a maximum issuable to a participant at any time. In 2023, the Board did not approve a grant for any RSU’s or PSU’s. Any compensation under the Long Term Incentive Plan was fulfilled with the issue of stock options. As of the Record Date, there were nil RSUs and PSUs issued and outstanding. 147,503 Common Shares remain in the RSU Plan Reserve.
Under the RSU Plan, the Board may, without shareholder approval:
(a) make non-material and/or minor amendments to the terms of the Plan that are of a “housekeeping nature”;
(b) make amendments to the terms of any RSU or PSU granted under the Plan, including with respect to the vesting terms and vesting period, performance metrics (if any) associated with such Units, and the effect of termination of a participant’s employment with the Company;
(c) accelerate vesting of any Units; or
(d) suspend the Plan in whole or in part and may at any time terminate the Plan.
Other amendments to the RSU Plan will be subject to receipt of shareholder approval, including in the case of: (i) any amendment to the RSU Plan’s amendment provision itself; (ii) any increase in the maximum number of Shares in the RSU Plan Reserve; or (iii) any matters or amendments that may require shareholder approval under applicable law or TSX rules.
The rights and benefits under the RSU Plan are neither assignable nor transferrable.
Benefits and Perquisites
The Company offers group life, health and dental insurance, disability insurance, vacation and other benefits to the NEOs and other executives. These benefits are competitive while containing costs. Additionally, the organization currently provides a limited number of perquisites in the form of car allowance and club memberships to certain NEOs.
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3. Summary Compensation Table
The following table sets out information concerning the compensation earned from the Company by the NEOs during the financial years ended December 31, 2024, 2023 and 2022.
| Name and Principal Position | Year | Salary ($) | Share-Based Awards(1) ($) | Option-Based Awards(2) ($) | Non-Equity Incentive Plan Compensation | All Other Compensation(4) ($) | Total Compensation ($) | |
|---|---|---|---|---|---|---|---|---|
| Annual Incentive Plans(3) ($) | Long-Term Incentive Plans ($) | |||||||
| DANIEL VUCINIC(5)...President and Chief Executive Officer | 2024 | 310,000 | - | - | 109,856 | - | - | 419,856 |
| 2023 | 172,686 | - | 783,232 | 125,000 | - | - | 1,080,918 | |
| RAJNEESH SAPRA(6)...Chief Financial Officer | 2024 | 206,250 | - | 575,657 | 52,625 | - | - | 834,532 |
| OSMAN MOHAMEDNUR..Vice President, Engineering & Operations | 2024 | 247,500 | - | 78,947 | 46,778 | - | 2,500 | 375,725 |
| 2023 | 240,000 | - | 104,386 | 16,992 | - | - | 361,378 | |
| 2022 | 216,015 | - | 62,023 | 50,025 | - | - | 328,063 | |
| MAY DAOU(7)...Vice President, Revenue Management | 2024 | 233,750 | - | 164,473 | 17,010 | - | 45,923 | 461,156 |
| FADI JOSEPH(8)...Vice President, Sales & Marketing | 2024 | 220,000 | - | 105,263 | 32,484 | - | 131,139 | 488,886 |
| 2023 | 25,949 | - | 36,133 | - | - | - | 62,082 | |
| Former Named Executive Officers | ||||||||
| PHILIP JONES(9)... | 2024 | 51,337 | - | - | - | - | 284,639 | 335,976 |
| 2023 | 285,000 | - | 123,958 | 20,178 | - | - | 429,136 | |
| 2022 | 190,000 | - | 74,113 | 49,535 | - | - | 313,648 | |
| PARVEEN MITHRA(10)... | 2024 | 154,500 | - | 82,236 | 20,000 | - | 10,750 | 267,486 |
| JASON TOLEDANO(11)... | 2024 | 13,517 | - | - | - | - | - | 13,517 |
Notes:
(1) The amounts represent the fair value on the grant date of RSUs and/or PSUs awarded pursuant to the RSU Plan. The fair value on the grant date of each PSU or RSU granted is based on the closing price of the Common Shares on the TSX on the grant date. The vesting of PSUs is dependent upon the achievement of established performance conditions set out by the Board of Directors.
(2) The fair value of options granted was estimated at the date of grant using the Black-Scholes option pricing model using assumptions based on expected life, risk free rate, expected dividend yield and expected volatility in accordance with International Financial Reporting Standards.
(3) The only non-equity annual incentive plan is described under the heading "Components of Executive Compensation - Annual Incentives". The 2024 Annual Incentives were paid as $50\%$ in cash payments and $50\%$ in issuance of new stock Options to the applicable executives in the first quarter of 2025. Accordingly, on March 31, 2025, the Company granted 120,000 Options to Mr. Vucinic, 50,000 Options to Mr. Sapra, 40,319 Options to Mr. Mohamednur, 38,707 Options to Ms. Daou and 50,378 Options to Mr. Joseph. The Options were priced at $\$1.00$ based on the closing share price of the Company's Common Shares on the TSX on March 31, 2025.
(4) None of the NEOs have been provided perquisites, including property or other benefits that are not generally available to all employees that in aggregate are worth $50,000 or more, or are worth 10% or more of a NEO's total salary for the financial year.
(5) Mr. Vucinic was appointed President and Chief Executive Officer effective June 12, 2023.
(6) Mr. Sapra was appointed Chief Financial Officer of the Company effective April 1, 2024.
(7) Ms. Daou was promoted from her role as Senior Director, Solution Architecture and Customer Success to Vice President, Revenue Management effective April 1, 2024. Prior to April 1, 2024, Ms. Daou was not a Named Executive Officer.
(8) Mr. Joseph joined the Company on November 3, 2023, and was appointed as Vice President, Sales & Marketing on November 20, 2023.
(9) Mr. Jones resigned from his position with the Company as Chief Financial Officer, effective December 31, 2023 and continued as Interim Chief Financial Officer until February 28, 2024. Mr. Jones received cash termination payments of $284,639, which was paid within the year ended December 31, 2024.
(10) Ms. Mithra acted as Interim Chief Financial Officer of the Company from March 1, 2024 to March 31, 2024.
(11) Mr. Toledano was appointed Chief Financial Officer effective January 2, 2024, however Mr. Toledano resigned from his position effective January 16, 2024 for personal family reasons.
- Incentive Plan Awards
Outstanding Share-Based Awards and Option-Based Awards
The following table provides information with respect to stock options, RSUs and PSUs outstanding and held by the NEOs as of December 31, 2024:
| Option-Based Awards | Share-Based Awards | ||||||
|---|---|---|---|---|---|---|---|
| Name | Number of Securities underlying unexercised options (#) | Option exercise price ($) | Option expiration date | Value of unexercised in-the-money options(1) ($) | Number of shares or units of shares that have not vested (#)(2) | Market or payout value of share-based awards that have not vested ($)(3) | Market or payout value of vested share-based awards not paid out or distributed ($) |
| DANIEL VUCINIC(2) | 630,000 | 1.87 | 08/09/2033 | - | - | - | - |
| President and Chief Executive Officer | |||||||
| RAJNEESH SAPRA(2) | 350,000 | 2.11 | 06/25/2034 | - | - | - | - |
| Chief Financial Officer | - | ||||||
| OSMAN MOHAMEDNUR(2) | 48,000 | 2.11 | 06/25/2034 | - | - | - | - |
| Vice President, Engineering & Operations | 44,833 | 3.81 | 01/31/2033 | - | - | - | - |
| 10,000 | 5.44 | 03/28/2032 | - | - | - | - | |
| 22,537 | 3.70 | 07/06/2032 | - | - | - | - | |
| 5,387 | 5.25 | 08/13/2031 | - | - | - | - | |
| MAY DAOU(2) | 100,000 | 2.11 | 06/25/2034 | - | - | - | - |
| Vice President, Revenue Management | 4,310 | 5.25 | 08/12/2031 | - | - | - | - |
| FADI JOSEPH(2) | 64,000 | 2.11 | 06/25/2034 | - | - | - | - |
| Vice President, Sales & Marketing | 32,000 | 1.60 | 12/19/2033 | - | - | - | - |
Notes:
(1) Options are "in-the-money" at year end if the market value of the underlying Common Shares as at that date exceed the exercise price of the option. The closing price on the TSX of the Common Shares as of December 31, 2024 was $1.21. No adjustment has been made for Options that have not yet vested and are therefore not yet exercisable.
(2) On March 31, 2025, the Company granted 120,000 Options to Mr. Vucinic, 50,000 Options to Mr. Sapra, 40,319 Options to Mr. Mohamednur, 38,707 Options to Ms. Daou and 50,378 Options to Mr. Joseph. The Options were priced at $1.00 based on the closing share price of the Company's Common Shares on the TSX on March 31, 2025.
Incentive Plan Awards – Value Vested or Earned in 2024
The following table provides information on the option-based, share-based and non-equity based incentive plan amounts vested or earned for the year ended December 31, 2024.
| Name | Option-based awards – Value vested during the year^{(1)} ($) | Share-based awards – Value vested during the year ($) | Non-equity incentive plan compensation – value earned during the year^{(2)} ($) |
|---|---|---|---|
| DANIEL VUCINIC | |||
| President and Chief Executive Officer | - | - | 109,856 |
| RAJNEESH SAPRA | |||
| Chief Financial Officer | - | - | 52,625 |
| OSMAN MOHAMEDNUR | |||
| Vice President, Engineering and Operations | - | - | 46,778 |
| MAY DAOU | |||
| Vice President, Revenue Management | - | - | 17,010 |
| FADI JOSEPH | |||
| Vice President, Sales & Marketing | - | - | 32,484 |
Notes:
(1) Following the grant date, stock options vest on the anniversary date of the grant in three equal amounts over a three-year period.
(2) The amount shown represents the annual incentive awards for 2024 as shown in the “Non-Equity Incentive Plan Compensation – Annual Incentive Plans” column of the Summary Compensation Table.
See “Long Term Incentive Plans” for a description of the Company’s Share Option Plan and RSU Plan and significant terms of such plans. See “Annual Incentives” for a description of the terms and targets for annual incentives paid to NEOs.
5. Pension Plan Benefits
The Company does not provide any pension plan for any of its NEOs or directors, nor does it have a deferred compensation plan.
18
IV. SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
The following table provides information as of December 31, 2024 regarding the Directors' Share Compensation Program, the Common Shares issuable upon the exercise of options outstanding under the Company's Share Option Plan, the weighted average exercise price of such options and the number of Common Shares remaining available for issuance under the Share Option Plan. The table also provides information as of December 31, 2024 regarding the Common Shares issuable upon the vesting and settlement of RSUs and/or PSUs under the Company's RSU Plan and the number of Common Share remaining available for issuance to settle such Units.
| Plan Category | Securities to be issued on exercise of outstanding options, warrants and rights (#) (a) | Weighted average exercise price of outstanding options, warrants and rights ($) (b) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a) (#) (c) |
|---|---|---|---|
| Equity compensation plans approved by securityholders | |||
| • Share Option Plan^{(1)} | 1,587,328 | 2.22 | 1,226,712 |
| • RSU Plan^{(2)} | n/a | n/a | 147,503^{(4)} |
| • Directors’ Share Compensation Program^{(3)} | n/a | n/a | 119,401 |
| Equity compensation plans not approved by securityholders | 0 | 0 | 0 |
Notes:
(1) The Share Option Plan was most recently approved by shareholders of the Company on June 25, 2024.
(2) The RSU Plan was most recently approved by shareholders of the Company on June 20, 2019.
(3) The Directors' Share Compensation Program was most recently approved by shareholders of the Company on June 15, 2023.
(4) The RSU Plan provides the Company with the option of settling vested RSUs and/or PSUs with cash equal to the market value of the equivalent number of Common Shares or delivering Common Shares to the holder either through the purchase of such Common Shares on the open market, or through the issuance of Common Shares from treasury. Therefore, the number of securities remaining available for further issuance only reflects a limit to the Company of settling such RSUs and/or PSUs through the issuance of Common Shares from treasury.
Burn Rate
The following table discloses the annual burn rate for each of the Share Option Plan, RSU Plan and the Directors' Share Compensation Program during each of the three most recently completed fiscal years. The rates are calculated based on the weighted average of the Common Shares outstanding during the applicable year.
| Plan | 2024 | 2023 | 2022 |
|---|---|---|---|
| Share Option Plan | 3.79% | 5.11% | 1.65% |
| RSU Plan | 0% | 0% | 0% |
| Directors’ Share Compensation Program | 0.65% | 0.68% | 0.35% |
V. BOARD OF DIRECTORS' COMPENSATION
In 2024, the directors of the Company were compensated on the following basis, in accordance with the Company's directors' share compensation program (the "Directors' Share Compensation Program"). The Directors' Share Compensation Program is used for the payment to non-management directors for annual and committee retainers in the form of Common Shares, as part of the overall compensation paid to directors. The Directors' Share Compensation Program is intended to (i) promote the achievement of the Company's long-term objectives by linking part of the compensation of non-management directors to interests of the Company's shareholders, and (ii) attract and retain directors of outstanding competence.
The Directors' Share Compensation Program was reapproved by the shareholders at the annual and special meeting of shareholders on June 15, 2023, increasing the number of Common Shares reserved for issuance under the program by an additional 300,000. To date, an aggregate of 1,100,000 Common Shares have been approved by shareholders for issuance under the Directors' Share Compensation Program. As of the date of this Management Information Circular, 87,599 Common Shares remain issuable to non-management directors pursuant to the Directors' Share Compensation Program.
Under the Directors' Share Compensation Program, the Board may, without TSX and shareholder approval, amend the amount of compensation payable to directors under such Program. Other amendments to the Directors' Share Compensation Program will be subject to receipt of shareholder approval and the approval of the TSX, to the extent required. The rights and benefits under the Directors' Share Compensation Program are neither assignable nor transferrable.
- Annual Director Retainer
Each non-Executive Director in 2024, was entitled to an annual Board retainer in Common Shares with a value of $25,000. The price used to determine the number of such Common Shares to be issued to the directors was the volume-weighted average trading price for the Common Shares for the 20 trading days immediately prior to the Company's annual meeting of shareholders in each year. These Common Shares were issued quarterly in four equal instalments.
- Committee Members
Each director participating as a member of a Board committee that was entitled to annual director retainer received in addition, the following annual committee member retainers:
| Audit Committee: | $5,000 in Common Shares |
|---|---|
| Compensation Committee: | $5,000 in Common Shares |
| Governance Committee: | $5,000 in Common Shares |
| Executive Committee: | $5,000 in Common Shares |
All such Common Shares were determined, earned and issued in the same manner as with the annual director retainer.
- Board and Committee Chairs
In addition, to the extent a Chairperson of the Board or a Board Committee was entitled to the annual director retainer, each such Chairperson also received the following annual retainer for their services:
| Board: | $75,000 in Common Shares |
|---|---|
| Audit Committee: | $15,000 in Common Shares |
| Compensation Committee: | $7,500 in Common Shares |
| Governance Committee: | $7,500 in Common Shares |
| Executive Committee: | $7,500 in Common Shares |
All such Common Shares were determined, earned and issued in the same manner as with the annual director retainer.
- Other Fees and Expenses
Each director entitled to receive an annual director retainer is also paid a fee of $1,000 cash per three (3) cumulative hours of attendance (in person or by either tele- or videoconference) at Board and Committee meetings. Travel expenses (if any) were reimbursed based upon economy air travel, and local business hotel arrangements were paid against submitted receipts.
- Board and Committee Meeting Attendance
The following table summarizes the meetings of the Board and its Committees held for the year ended December 31, 2024, together with the attendance of individual directors of the Company at such Board meetings and Committee meetings in which such director is a committee member.
| Director | Board of Directors
(4 meetings) | Audit
(4 meetings) | Corporate Governance
(4 meetings) | Compensation
(3 meetings) | Executive
(0 meetings) |
| --- | --- | --- | --- | --- | --- |
| KENNETH CAMPBELL^{(1)(3)} | 4 of 4 | - | - | 3 of 3 | - |
| MARTIN PINNES^{(2)(3)(5)} | 4 of 4 | 4 of 4 | - | 3 of 3 | - |
| PIETRO CORDOVA^{(4)(5)(7)} | 4 of 4 | 4 of 4 | 4 of 4 | - | - |
| TINA PIDGEON^{(5)(6)(7)} | 4 of 4 | 4 of 4 | 4 of 4 | - | - |
| JAMES A. WATSON^{(7)} | 4 of 4 | - | 4 of 4 | - | - |
| FREDERICK W. HRENCHUK^{(3)} | 4 of 4 | - | - | 3 of 3 | - |
| DANIEL VUCINIC | 4 of 4 | - | - | - | - |
Notes:
(1) Chairperson of the Board of Directors
(2) Chair of the Compensation Committee.
(3) Member of the Compensation Committee.
(4) Chair of the Audit Committee.
(5) Member of the Audit Committee.
(6) Chair of the Corporate Governance Committee.
(7) Member of the Corporate Governance Committee.
- Non-Executive Directors' Compensation Table for 2024
| Share-based awards | ||||||||
|---|---|---|---|---|---|---|---|---|
| Name | Fees earned ($)^{(1)} | Annual Retainer ($)^{(2)} | Committee Member Retainer ($)^{(2)} | Chair/ Committee Chair Retainer ($)^{(2)(3)} | Option-based awards ($) | Non-equity incentive plan compensation ($) | All other compensation ($) | Total ($) |
| KENNETH CAMPBELL | 4,528 | 25,000 | 5,000 | 75,000 | - | - | - | 109,528 |
| MARTIN PINNES | 6,222 | 25,000 | 10,000 | 7,500 | - | - | - | 48,722 |
| PIETRO CORDOVA | 6,889 | 25,000 | 10,000 | 15,000 | - | - | - | 56,889 |
| TINA PIDGEON | 6,889 | 25,000 | 10,000 | 7,500 | - | - | - | 49,389 |
| JAMES A. WATSON | 4,861 | 25,000 | 5,000 | - | - | - | - | 34,861 |
| FREDERICK W. HRENCHUK | 4,528 | 25,000 | 5,000 | - | - | - | - | 34,528 |
Notes:
(1) Fees paid in cash.
(2) Directors received annual and committee retainers in the form of Common Shares, as opposed to cash pursuant to the Directors' Share Compensation Program. These Common Shares were distributed quarterly in four equal instalments.
(3) Directors who served as Chair of the Board and/or Chair for a Committee received an additional retainer for their services in the form of Common Shares. These Common Shares were distributed quarterly in four equal instalments.
- Outstanding share-based awards and option-based awards of the Directors
The following table provides information regarding the option-based awards for each non-employee director outstanding as at year ended December 31, 2024. The directors’ annual, committee, and chair retainer fees are paid in Common Shares and such share-based compensation is disclosed above in the Table “Directors’ Compensation Table for 2024”. No other share-based award plan has been adopted for the directors.
| Option-Based Awards | Share-Based Awards | ||||||
|---|---|---|---|---|---|---|---|
| Name | Number of Securities underlying unexercised options(1) (#) | Option exercise price ($) | Option expiration date | Value of unexercised in-the-money options(2) ($) | Number of shares or units of shares that have not vested (#) | Market or payout value of share-based awards that have not vested ($) | Market or payout value of vested share-based awards not paid out or distributed ($) |
| KENNETH CAMPBELL | - | - | - | - | - | - | - |
| MARTIN PINNES | - | - | - | - | - | - | - |
| PIETRO CORDOVA | |||||||
| TINA PIDGEON | - | - | - | - | - | - | - |
| JAMES A. WATSON | - | - | - | - | - | - | - |
| FREDERICK W. HRENCHUK | - | - | - | - | - | - | - |
Notes:
(1) Each option entitles the holder to purchase one Common Share at the specified exercise price.
(2) Option is “in-the-money” at year end if the market value of the underlying Common Share as at that date exceed the exercise price of the option. The closing price on the TSX of the Common Shares as of December 31, 2024 was $1.21.
- Incentive Plan Awards – Value Vested or Earned in 2024
The following table provides information on the vesting and payouts of awards for each non-employee director under the Company’s incentive plans for the year ended December 31, 2024.
| Name | Option-based awards – Value vested during the year ($) | Share-based awards – Value vested during the year(1) ($) | Non-equity incentive plan compensation – value earned during the year ($) |
|---|---|---|---|
| KENNETH CAMPBELL | - | - | - |
| MARTIN PINNES | - | - | - |
| PIETRO CORDOVA | - | - | - |
| TINA PIDGEON | - | - | - |
| JAMES A. WATSON | - | - | - |
| FREDERICK W. HRENCHUK | - | - | - |
Notes:
(1) The directors’ annual, committee, and chair retainer fees are paid in Common Shares and such share-based compensation is disclosed above in the Table “Directors’ Compensation Table for 2024”.
VI. COMMON SHARE PERFORMANCE GRAPH
Since June 26, 2007, the Common Shares have been listed and posted for trading on the TSX under the symbol "TGO". The following graph compares the cumulative total shareholder return for $100 invested in the Common Shares with the total cumulative total return for$ 100 invested in each of the S&P/TSX Composite Index and S&P/TSX Small Cap Index for the five-year period from December 31, 2019 to December 31, 2024. The Common Shares are not included in either of the S&P/TSX Composite Index or S&P/TSX Small Cap Index.
The Compensation Committee believes that the performance of the Company in general as compared to the comparative indices used is reflective in total NEO compensation over such period.
VII. TERMINATION AND CHANGE OF CONTROL BENEFITS
1. Employment Agreements
Each NEO has entered into an employment agreement with either TERAGO Networks Inc. or TERAGO Networks (U.S.) Inc. (collectively, "TNI"), each of which is a wholly owned subsidiary of the Company. These agreements are subject to review and change as determined and approved by the Board and the NEO, as applicable, from time to time.
If TNI terminates the employment of any NEO, other than for cause, such NEO shall be entitled to a severance payment from TNI in an amount equal to the aggregate of:
- In the case of Mr. Vucinic, the base salary that would otherwise have been paid to such officer had his employment continued for a period of 12 months following the termination date, together with $100\%$ of Average Annual Bonus, plus one additional month of base salary for each year of service to maximum of six (6) additional months of base salary.
- In the case of Mr. Sapra, the base salary that would otherwise have been paid to such officer had his employment continued for a period of 6 months following the termination date, together with $100\%$ of Average Annual Bonus deemed to be $\$75,000$ in the first year of employment, plus two additional months of base salary for each year of service to maximum of six (6) additional months of base salary.
- In the case of Mr. Mohamednur, the base salary that would otherwise have been paid to such officer had his employment continued for a period of 12 months following the termination date, plus $100\%$ of Average Annual Bonus.
- In the case of Ms. Daou, the base salary that would otherwise have been paid to such officer had her employment continued for a period of 12 months following the termination date.
- In the case of Mr. Joseph, the base salary that would otherwise have been paid to such officer had his employment continued for a period of 3 months following the termination date, plus one additional month of base salary for each year of service to maximum of three (3) additional months of base salary.
"Average Annual Bonus" is defined in each NEO employment agreement as the average bonus payments received by the NEO for the three completed years (or such lesser completed fiscal years, as applicable) prior to his/her termination.
Each NEO has also entered into a non-solicitation and confidentiality agreement with TNI which provides for, among other things, non-solicitation and non-compete covenants in favour of TNI. These covenants will apply during the term of employment and for a specified period following the termination of their employment by TNI for any reason.
2. Stock Options
Under the terms of the Company's Share Option Plan, in the event of a proposed change of control transaction, the vesting of all outstanding options will accelerate immediately prior to the completion of any such transaction.
3. RSUs and PSUs
Under the terms of the RSU Plan, in the event of a proposed change of control transaction, the vesting of all outstanding RSUs or PSUs will accelerate immediately prior to the completion of any such transaction.
4. Potential Payments Upon Termination or Change of Control Accompanied with Termination
The following table shows potential payments to each NEO currently employed with the Company, as if the officer's employment had been terminated or a change in control accompanied with a termination had occurred as of December 31, 2024. If applicable, amounts in the table were calculated using $1.21, the closing price of the Common Shares on the TSX on December 31, 2024. The actual amounts that would be paid to any NEO can only be determined at the time of an actual termination of employment and would vary from those listed below. The estimated amounts listed below are in addition to any other benefits that are available to our salaried employees generally.
| Name | Triggering Event | Severance ($) | Equity-Based Compensation ($) | Total ($) |
|---|---|---|---|---|
| DANIEL VUCINIC | ||||
| President and Chief Executive Officer | • Without Cause Termination | |||
| • Change of Control | $463,047 | |||
| $854,856 | - | |||
| - | $463,047 | |||
| $854,856 | ||||
| RAJNEESH SAPRA | ||||
| Chief Financial Officer | • Without Cause Termination | |||
| • Change of Control | $212,500 | |||
| $350,000 | - | |||
| - | $212,500 | |||
| $350,000 | ||||
| OSMAN MOHAMEDNUR | ||||
| Vice President Engineering and Operations | • Without Cause Termination | |||
| • Change of Control | $287,932 | |||
| $431,898 | - | |||
| - | $287,932 | |||
| $431,898 | ||||
| MAY DAOU | ||||
| Vice President Revenue Management | • Without Cause Termination | |||
| • Change of Control | $240,000 | |||
| $287,552 | - | |||
| - | $240,000 | |||
| $287,552 | ||||
| FADI JOSEPH | ||||
| Vice President, Sales & Marketing | • Without Cause Termination | $73,333 | - | $73,333 |
A change of control transaction bonus plan was also established during the 2022 fiscal year. Subject to their employment with the Company at the time of a change of control transaction, certain members of the senior leadership team (Osman Mohamednur, being the remaining member of that plan) will share 10% of the change in equity value should a change of control transaction occur at a share price at or greater than $8.00 per common share. Equity value is calculated based on TERAGO's Inc.'s common share price multiplied by the number of outstanding shares. The change in equity value is calculated as the equity value per the change of control transaction less the Equity value based upon the $8.00 common share price. Any other change of control benefits would be offset against the carve-out amount.
VIII. INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS
To the knowledge of the Company, as at the date of this Management Information Circular and during the Company's financial year ended December 31, 2024, no director or executive officer, nor any proposed nominee for election as a
director, nor any associate or affiliate of such individuals was indebted to (i) the Company or any of its subsidiaries, or (ii) any other entity which is, or at any time since January 1, 2024 has been, the subject of a guarantee, support agreement, letter of credit or other similar arrangement or understanding provided by the Company or any of its subsidiaries.
IX. INTEREST OF CERTAIN PERSONS OR COMPANIES IN MATTERS TO BE ACTED UPON
Other than as set forth in this Circular, no person who has been a director or executive officer of the Company at any time since the beginning of the year ended December 31, 2024, nor any proposed nominee for election as a director of the Company, nor any associate or affiliate of any one of them, has any material interest, direct or indirect, by way of beneficial ownership of securities or otherwise, in any matter to be acted upon at the Meeting.
X. INTEREST OF INFORMED PERSONS IN MATERIAL TRANSACTIONS
Management of the Company is not aware of any material interest, direct or indirect, of any “informed person” of the Company (as defined under Canadian securities legislation), any proposed director of the Company, or any associate or affiliate of any informed person or proposed director, in any transaction since January 1, 2024 or in any proposed transaction which has materially affected or would materially affect the Company.
XI. CORPORATE GOVERNANCE PRACTICES
See Schedule A attached to this Management Information Circular.
XII. ADDITIONAL INFORMATION
Additional information relating to the Company is available on SEDAR at www.sedarplus.ca, under the Company’s name. Additional financial information is contained in the Company’s 2024 Financial Statements and MD&A, which are available on SEDAR. Shareholders may request, and receive free of charge, copies of the 2024 Financial Statements, the MD&A, and the AIF by sending a request to:
TERAGO Inc.
55 Commerce Valley Drive West
Suite 800
Thornhill, ON L3T 7V9
Attn: Investor Relations
[email protected]
XIII. SHAREHOLDER PROPOSALS
Shareholder proposals for the Company’s next year’s annual shareholders meeting must be received by the Company by 5:00 p.m. (Toronto time) on February 28, 2026. They must be sent in writing to the attention of the Corporate Secretary of the Company by mail to: 55 Commerce Valley Drive West, Suite 800, Thornhill, ON L3T 7V9, Attn: Corporate Secretary.
XIV. DIRECTORS’ APPROVAL
The Board has approved the contents and the distribution of this Management Information Circular to its shareholders.
Dated May 2, 2025.
BY ORDER OF THE BOARD OF DIRECTORS
(signed) “Shaunik Katyal”
Shaunik Katyal
General Counsel
TERAGO Inc.
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SCHEDULE A - CORPORATE GOVERNANCE PRACTICES
The Company and its Board are committed to maintaining high standards of governance in a rapidly changing environment. The Company's system of corporate governance is subject to continuous review and improvement. The Board has proactively adopted governance policies and practices designed to align the interests of the Board and management with those of shareholders and to promote high standards of ethical behaviour within the Company.
On the recommendation of the Corporate Governance Committee, the Board has approved the following corporate governance disclosure.
1. Board of Directors
Director Independence
The Board is currently comprised of seven (7) members: Daniel Vucinic, Kenneth Campbell, Martin Pinnes, Pietro Cordova, Tina Pidgeon, James A. Watson and Frederick W. Hrenchuk. Mr. Hrenchuk is not standing for re-election at the Meeting.
As of the date of this Management Information Circular, a majority of the Board are independent as six (6) of the directors are “independent” within the meaning of the National Instrument 58-101 – Disclosure of Corporate Governance Practices. The independent directors are Messrs. Cordova, Watson, Campbell, Hrenchuk and Pinnes and Ms. Pidgeon. The independent directors do not have a direct or indirect material relationship with the Company, nor do they have “control”, via a direct or indirect power to direct or cause the direction of the management and policies of the Company.
Mr. Vucinic is not considered independent by reason of serving as Chief Executive Officer of the Company.
Other Directorships
The following directors or director nominees are also directors of other reporting issuers (or the equivalent) in a Canadian or foreign jurisdiction:
| Name | Name of Reporting Issuer | Name of Exchange/Market |
|---|---|---|
| Kenneth Campbell | NuRAN Wireless Inc. | Canadian Securities Exchange (CSE) |
Independent Chair
The Board has separate individuals serving as the Chair of the Board and the Chief Executive Officer, in accordance with the standing policies of the Company. Mr. Campbell was appointed Chair of the Board effective on March 8, 2021. The Board has adopted a position description for the Chair setting out his responsibilities and duties.
The Chair of the Board ensures that the Board operates independently of management and that directors have an independent leadership contact. The Chair manages the affairs of the Board, with a view to ensuring that the Board functions effectively and meets its obligations and responsibilities and leads the Board in the execution of its responsibilities to shareholders. At each regularly scheduled Board meeting, the Chair presides over a session of the directors at which members of management are not present to facilitate open and candid discussions on certain matters. It is also the practice of each Committee of the Board to meet without management present during the course of their meetings. Information to be conveyed and actions undertaken as a result of these sessions are communicated to relevant parties, as appropriate.
Board Size
At the Annual Meeting of Shareholders on June 3, 2025, six directors will stand for election for a one-year term. The matter of Board size is considered formally on an annual basis by the Board and on an ongoing basis by its Corporate Governance Committee. The Board is of the view that the proposed membership of the Board has the necessary breadth and diversity of experience and is generally of a size to provide for effective decision-making and staffing of Board Committees.
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2. Board Mandate
The Board, either directly or through its committees, is responsible for the supervision of management of the business and affairs of the Company with the objective of enhancing shareholder value. The Board Mandate, the text of which can be found in Schedule B of this Management Information Circular, sets out the responsibilities to be discharged by the Board, as well as the personal and professional attributes and the duties and responsibilities required of each director.
3. Position Descriptions
The Board has approved written position descriptions for the Chair of the Board, the Committee Chairs and the Chief Executive Officer. These position descriptions are available on the Company’s website at www.terago.ca.
4. Orientation and Continuing Education
The Company has procedures in place to ensure that the Board has timely access to information it needs to carry out its duties. In particular, directors (i) receive a comprehensive package of information prior to each Board and Committee meeting, (ii) are involved in setting the agenda for Board and Committee meetings, (iii) attend an annual strategic planning session, and (iv) have full access to the Company’s senior management and employees. From time to time, the Board, through its Corporate Governance Committee, reviews continuing education to ensure that the directors maintain the skill and knowledge necessary to meet their obligations as directors.
The Corporate Governance Committee is responsible for the orientation and education of directors. The goal of the director orientation process is to ensure that new directors fully understand the nature and operation of the business of the Company, the role of the Board and its Committees, and the contribution that individual directors are expected to make. New directors are provided with materials containing details of the Company’s organizational structure, the structure of the Board and its Committees, relevant position descriptions, compliance requirements for directors, corporate policies and by-laws. One-on-one meetings are often arranged with the executive officers of the Company to enable the new directors to learn about the various functions and activities of the Company.
Directors are expected to attend all Board and Committee meetings. Directors are also expected to prepare thoroughly in advance of each meeting in order to actively participate in the deliberations and decisions. On an ongoing basis, as part of regular Board meetings, directors receive presentations on various aspects of the Company’s operations.
5. Ethical Business Conduct
The Board has adopted the TERAGO Inc. Code of Business Conduct and Ethics (the “Code”), which provides a framework for directors, officers and employees on the conduct and ethical decision-making integral to their work. The Board, through its Corporate Governance Committee, reviews the operation of, and monitors compliance with, the Code. On an annual basis, the Code will be reviewed by the Company’s Legal and Human Resources departments to ensure that it complies with applicable legal requirements and is in alignment with general best practices. In the event that amendments are needed, recommendations are made to the Corporate Governance Committee and the Board for approval. The Code has been filed with the Canadian securities regulatory authorities at www.sedar.com and is available on the Company’s website at www.terago.ca. A waiver of the Code will be granted only in exceptional circumstances and shall be granted by the Board only. To date, no such waivers have been granted.
The Board has also adopted the TERAGO Inc. Whistleblower Policy (the “Whistleblower Policy”) which allow officers and employees who believe that a violation of the Code or applicable laws has occurred to report this violation on a confidential and anonymous basis. The procedures allow concerns regarding accounting, internal accounting controls or auditing matters to be reported on a confidential and anonymous basis. Complaints can be made to the head of either the Legal Department or Human Resources Department, or the Chair of the Audit Committee.
Directors, officers and employees are asked to acknowledge, on an annual basis, that they have read and understand the Code and Whistleblower Policy (amongst other policies) and certify that they are in compliance with the principles set forth in the Code.
The Board believes that providing a forum for officers and employees to raise concerns about ethical conduct and treating all complaints with the appropriate level of seriousness foster a culture of ethical conduct within the Company.
Where the personal or business relationships or interests of directors may conflict with those of the Company, directors are required to disclose in writing the nature and extent of the conflict of interest. In the event of a conflict of interest, the director will leave the relevant portion of a meeting and the director will not vote or participate in the decision.
6. Nomination of Directors
The Board derives its strength from the background, diversity, qualities, skills and experience of its members. Directors are elected by the shareholders at each annual meeting of shareholders to serve for a term expiring on the date of the next annual meeting.
The Corporate Governance Committee is responsible for identifying and recommending to the Board suitable director candidates. As part of the process, the Corporate Governance Committee considers the competencies and skills that the Board, as a whole, should possess, assesses the skill sets of current Board members and identifies any additional skill sets deemed to be beneficial when considering Board candidates in light of the opportunities and risks facing the Company. The Corporate Governance Committee may engage outside advisors to assist in identifying qualified candidates. Potential candidates are screened to ensure that they have the attributes of integrity and accountability; ability to engage in informed judgment; financial literacy; excellent communication skills; and the ability to work effectively as a team. These skills and attributes are necessary in order to execute their duties and responsibilities. The Corporate Governance Committee also considers the positions held with other organizations and the other business and personal commitments of prospective director candidates to determine whether they would be able to fulfill their duties as Board members.
Pursuant to a subscription agreement dated April 14, 2021, between the Company and Cymbria Corporation, acting at the direction of its portfolio manager, EdgePoint Investment Group Inc. ("Cymbria"), the Company granted certain nomination rights to Cymbria (the "Nomination Right") whereby it will have the right to specify an individual to be nominated to the Board so long as Cymbria owns more than 10% of the outstanding Common Shares. Cymbria currently has ownership of, or control or direction over 4,706,715 Common Shares, representing approximately 23.49% of the outstanding Common Shares as of the Record Date. Cymbria has designated Mr. Pinnes as its "Board Designee" pursuant to such Nomination Right and the Company has nominated Mr. Pinnes to stand as a nominee for election at the upcoming Meeting.
More information regarding the composition of the Corporate Governance Committee, as well as a summary of its responsibilities, powers and operation, is set out below under the heading "Board Committees - Corporate Governance Committee".
7. Tenure of Directors
It is proposed that each of the persons nominated and elected as a director at the Meeting will serve until the close of the next annual meeting of the Company or until his or her successor is elected or appointed. On February 24, 2015, the Board adopted a term limit of eight (8) years of service (the "Director Term Limit") for directors of the Company (except the CEO). The Director Term Limit is effective on February 24, 2015, on a go forward basis and any service of a director to the Company prior to such date will not be counted towards the Director Term Limit. For clarity, a director that has reached the Director Term Limit may serve on the Board until the next annual general meeting of the shareholders. The Board believes that the Director Term Limit will balance the need and value of experience and continuity amongst board members and the imposition of new perspectives and expertise from new directors being appointed or elected at the end of a director's term. The Mandate of the Corporate Governance Committee specifically sets out as a duty for the Corporate Governance Committee to consider the term served by existing directors when planning for the composition of the Board and to ensure that there is a range in the tenure of the directors.
The Board also conducts self-assessments (See "Assessments" below) to evaluate the effectiveness of the Board and each Board Committee. The Board relies on such assessments as one determination on whether the Board is in need of additional or new directors.
As of December 31, 2024, three out of the current seven directors (or 43%) of the current Board, has served on the Board for four (4) years or less, four of whom (or 57%) of the current Board, has served on the Board for less than two (2) years.
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- Diversity
The Mandate of the Corporate Governance Committee encourages and values diversity in the composition of the Board and requires periodic review of the composition of the Board as a whole to recommend, if necessary, measures to be taken so that the Board reflects the appropriate balance of qualifications, experience, and skills required for the Board as a whole. The Mandate of the Corporate Governance Committee sets out as a duty for the Corporate Governance Committee to consider demographics, and also in particular the level representation of certain designated groups (as defined below) on the Board when making decisions with respect to the composition of the Board. In carrying out this duty, the Corporate Governance Committee may retain outside advisors or experts as it deems necessary, which may include the identification and nomination of candidates who are female, visible minorities, indigenous peoples or people with a disability, for the Board should the Corporate Governance Committee determine an exclusive search for such a candidate is necessary.
The Company does not have specific targets for Board or Senior Leadership Team representation of women, indigenous peoples, persons with disabilities, 2SLGBTQ+, or members of visible minorities (the "designated groups"). They are factors that are considered in the identification process, and ultimately it is the skills, experience, expertise, character and behavioral qualities that are most important in determining the value that an individual could bring to the Board or the management team.
The Company also ensures the most talented and strongest leaders are recruited, developed and retained to achieve its business objectives and recognizes the value of diversity, including knowledge, experience, skills, expertise, gender and background in making its decisions. In the Company's "Recruitment Policy" which establishes the process of recruitment and selection of employees and includes the hiring of managerial level positions and executive officers, the Company will consider the current level of representation of designated groups in managerial positions when seeking and hiring candidates. An example of how this consideration is carried out is in the direction and instructions that the Company may provide when using external agencies for screening candidates and hiring. In addition, the Company's "Accessibility Policy" seeks to eliminate employment barriers against persons with disability from the recruitment process to ultimate employment, and its "Respect in the Workplace Policy" ensures inclusiveness and prohibition against discrimination or harassment of individuals in the designated groups (amongst others).
The Company recently surveyed the Board and senior management to determine the number and proportion of individuals that self-identified as belonging to one or more of the designated groups. Participation in the survey was voluntary and, as such, the results represent only those individuals who elected to participate and may not be entirely representative of the designated groups at the Board or senior management level.
Currently, the Board is comprised of one female director (14%) and six male directors (86%). No directors have identified as either visible minorities (0%), indigenous persons (0%) or a person with disabilities (0%). One director preferred not to disclose any information as part of the self-identification survey.
The Company's Senior Leadership Team, which is comprised of senior director level positions and higher, includes: 3 females, representing 49% of the Senior Leadership Team. 1 individual in this group has identified as visible minority representing 14% of Senior Leadership Team, and none who have identified as indigenous persons (0%) or a person with disabilities (0%).
There is currently a deep pool of talent who are within the designated groups holding high potential and mid-level managerial positions at the Company whom the Company looks to support and to provide opportunities for growth.
- Board Committees
To assist in exercising its responsibilities, the Board has established four standing Committees: the Audit Committee; the Corporate Governance Committee; the Compensation Committee and the Executive Committee.
The roles and responsibilities of each Committee are set out in formal written Mandates, copies of which are available on our website at www.terago.ca. These Mandates are reviewed annually to ensure they reflect best practices as well as applicable regulatory requirements.
Audit Committee
The current members of the Audit Committee are Pietro Cordova (Chair), Martin Pinnes and Tina Pidgeon. All of the members of the Audit Committee are "independent" within the meaning of the audit committee requirements adopted by the Canadian Securities Administrators (CSA).
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The Audit Committee oversees the integrity of the Company’s financial reporting, its internal control, disclosure control and internal audit function, and its compliance with legal and regulatory requirements. The Audit Committee also reviews and assesses the qualifications, independence and performance of the Company’s auditors. In addition to being “independent”, the Board has determined that each member of the Audit Committee is “financially literate”, as such term is defined under CSA rules.
At each quarterly meeting of the Audit Committee, members of the Audit Committee meet separately (without management present) with the Company’s auditors to review specific issues. The Audit Committee requires management to implement and maintain appropriate internal controls. Annually, the Committee reviews and approves the internal control policy and audit mandate. The Audit Committee meets quarterly with the auditors and management on matters of internal control. It also meets regularly with the auditors and management to assess the adequacy and effectiveness of the internal control systems. The Audit Committee also pre-approves all audit and non-audit work performed by the auditors.
Additional information relating to the Audit Committee is included in the Company’s Annual Information Form under the heading “Audit Committee” which is available on SEDAR at www.sedarplus.ca.
Corporate Governance Committee
The current members of the Corporate Governance Committee are Tina Pidgeon (Chair), James A. Watson and Pietro Cordova.
The Corporate Governance Committee identifies and recommends candidates for nomination to the Board, as described above, monitors the orientation program for new directors and maintains a process for assessing the performance of the Board, its committees and individual directors. The Corporate Governance Committee receives periodic reports on the Company’s corporate social responsibility efforts and programmes, monitors best practices for governance and annually reviews the Company’s governance practices and disclosures to ensure that it continues to exemplify high standards of corporate governance. The Corporate Governance Committee reviews all Board and Committee Mandates, standing corporate policies and position descriptions to ensure that they meet all applicable regulatory requirements and best practices.
Compensation Committee
The current members of the Compensation Committee are Martin Pinnes (Chair), Kenneth Campbell and Frederick W. Hrenchuk. All of the members of the Compensation Committee are independent. Mr. Hrenchuk is not standing for re-election at the Meeting. The Board of Directors will reconstitute the Compensation Committee following the Meeting.
The Compensation Committee’s primary responsibilities include evaluating and making recommendations to the Board regarding compensation of executive officers and directors, equity incentive plans, and general policies and programs related to compensation and benefits.
The Compensation Committee annually reviews, and recommends for Board approval, directors’ and executive compensation to ensure it is competitive and consistent with the responsibilities and risks involved in being an effective director and/or officer.
The Compensation Committee reviews and approves goals and objectives that the Chief Executive Officer is responsible for meeting each year. The Compensation Committee also conducts an annual assessment of the Chief Executive Officer’s performance in relation to those objectives and reports the results of the assessment to the Board.
The Compensation Committee has the authority to retain consulting firms from time to time to assist in carrying out the Compensation Committee’s responsibilities, including determining the compensation of the Chief Executive Officer and other executives, which also facilitates objectivity for making compensation decisions.
The Compensation Committee reviews succession planning for the Chief Executive Officer and other senior management, including planning in the event of an emergency or retirement. The Company’s succession planning process involves identifying critical senior leadership roles; assessing the capabilities of our executive officers; developing succession plans for all executive officer roles; and developing a leadership “pipeline” comprised of the Company’s most talented individuals.
Executive Committee
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Currently, there are no appointed members of the Executive Committee. When appointed, the Executive Committee is comprised of three independent members of the Board (none of whom are members of management).
The primary function of the Executive Committee is to assist the Board by acting in the Board's place and stead, particularly with respect to the preliminary consideration and approval of matters of significance. While it is intended that all such matters first be brought before the full Board for consideration, it is recognized that the Executive Committee may be required to meet and exercise the powers of the Board when the full Board is not in session or cannot reasonably be called in session.
In addition to any other duties and responsibilities assigned to it from time to time by the Board, the Executive Committee, when the Board is not in session, may exercise powers vested in and exercisable by the Board, subject to applicable law.
The Executive Committee refers back to the full Board for ratification, confirmation and approval of all such matters as the Executive Committee may deem appropriate. The Executive Committee may retain or appoint, at the Company's expense, outside advisors or experts as it deems necessary to carry out its duties.
10. Assessments
To serve the interests of shareholders and other stakeholders, the Company's governance system is subject to ongoing review and assessment. One of the ways the Board and the Board Committees do this is through self-assessments conducted from time to time.
11. Strategic Planning
The Board approves the Company's strategic plans. In addition to addressing key initiatives, these plans include details of the opportunities, risks, competitive position, financial projections and other key performance indicators for each of the principal business groups. An annual strategy session enables directors to gain a fuller appreciation of planning priorities and progress being made in relation to the strategic plans. It also provides an opportunity for directors to give constructive feedback to management. Throughout the year, directors receive strategic updates as part of regular Board meetings.
12. Disclosure Policy
The Board has approved a Disclosure, Confidentiality and Insider Trading Policy (the "Disclosure Policy") covering the timely dissemination of all material information. The Disclosure Policy, which is reviewed annually, establishes consistent guidance for determining what information is material and how it should be disclosed to avoid selective disclosure and to ensure that material information is widely disseminated. The Company also has a Disclosure Committee comprised of members of senior management, including the Chief Executive Officer, the Chief Financial Officer and the General Counsel and Corporate Secretary of Legal. The Disclosure Committee is responsible for reviewing all continuous disclosure documents and ensuring their timely public release.
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SCHEDULE B — BOARD MANDATE
The Board of Directors of TERAGO Inc. is committed to maintaining current and effective corporate governance. This Mandate of the Board of Directors (the "Board") of TERAGO Inc. is made with reference to National Policy 58-201 – Corporate Governance Guidelines and National Instrument 58-101 – Disclosure of Corporate Governance Practices of the Canadian Securities Administrators. It will be reviewed periodically to ensure that it consistently follows updated best practices and that it will provide appropriate and effective guidance to the Board as to their duties and responsibilities. This Mandate was initially adopted and approved by the Board on August 13, 2007, and it was most recently ratified at a meeting of the Board on March 6, 2024.
1. STATEMENT OF POLICY
- The Board is elected by and accountable to the Company’s shareholders and is responsible for overseeing and supervising, directly and through its various committees, the conduct of the business and affairs of the Company. Though elected by the shareholders, the Board is not mandated to represent any particular interest. Rather, all decisions must be made in the best interests of the Company. The Board has delegated the day-to-day management and operation of the Company’s business to management but is responsible for ensuring that management discharges this responsibility effectively.
2. STRUCTURE
Board
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The members of the Board shall be elected annually by the shareholders of the Company or as otherwise provided by its Articles. The Corporate Governance Committee of the Board will, from time to time review the number of directors, the need for recruitment and the experience required for any new nominee to ensure that the Board facilitates effective and efficient oversight. Pursuant to its Articles, the Board shall consist of a minimum of one and a maximum of 10 directors and be in accordance with all applicable regulatory requirements. A majority of the Board shall be comprised of directors who are independent. A director is independent if he or she has no direct or indirect material relationship with the Company as determined in accordance with applicable laws and regulations.
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Each member of the Board, including the Chair, who shall be appointed from among its members, will act honestly and in good faith with a view to the best interests of the Company and exercise the care, diligence and skill that reasonably prudent people would exercise in comparable circumstances.
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Effective February 24, 2015, each member of the Board (except the CEO), including the Chair shall serve for no longer than eight (8) years as a director of the Company (the "Director Term Limit"). The Director Term Limit applies on a go forward basis and any service of a director to the Company prior to February 24, 2015, will not be counted towards the Director Term Limit. For clarity, a director that has reached the Director Term Limit may serve on the Board until the next annual general meeting of the shareholders.
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The Board and the Board Chair will fulfill their mandates by carrying out the duties and responsibilities set forth below.
Committees
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The Board has the authority and may establish committees and delegate duties and responsibilities to such committees and appoint members of such committees from among its directors. The Board will assess matters to be delegated and the constitution of each committee annually.
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The Board has established three standing committees including a corporate governance committee, a compensation committee and an audit committee. Other committees may be established on an ad hoc basis from time to time to examine specific issues on behalf of the Board.
3. MEETINGS
- The Board shall meet in accordance with a schedule established each year by the Board and at such other times as the Board may determine. Notice of each meeting shall be given to each director and shall state the nature of the business to be conducted at such meeting. An information package, appropriate in detail for the items to be discussed, shall be sent to each director in advance of the meeting. The Board will endeavour to
hold at least one meeting per calendar year outside of the Toronto area.
- A quorum for the transaction of business shall consist of the majority of the directors of the Board. Members may participate by means of telephonic, electronic or other communication facilities as to permit all persons participating in such meeting to communicate adequately with each other.
- The Corporate Secretary of the Company shall act as secretary of Board meetings. Minutes of such meetings shall be recorded and prepared by the Corporate Secretary and subsequently presented to the Board for approval.
- At the discretion of the Board, members of management and others may attend Board meetings. However, executive sessions of the Board, without members of management being present, may be held at every board meeting.
- Independent directors shall have the opportunity to meet at appropriate times without management present at regularly scheduled meetings. Independent directors may propose agenda items for meetings of independent directors through communication with the Chair.
4. RESPONSIBILITIES AND ROLE OF THE BOARD
In addition to its statutory responsibilities, and matters delegated to Board committees as set out below, the Board’s duties and responsibilities include:
a) review and approve the Company’s long-term strategic objectives and adopt a planning process that recognizes the opportunities and risks of the business in developing the strategic plan and approve, at least annually, a strategic plan;
b) identify and assess the principal risks inherent in the business and ensure management takes all reasonable steps to appropriately manage such risks;
c) review and approve management’s business plans and budgets (both operating and capital) and monitor the implementation of such plans;
d) review and approve any significant strategic transactions (including acquisitions, divestitures, financings, investments and alliances) that are not considered to be in the ordinary course of business;
e) review the financial performance, financial reporting and disclosure of the Company as well as obtaining reasonable assurances that the internal controls and management information systems are adequate;
f) review the Company’s disclosure policy to ensure the Company’s performance is adequately and appropriately reported on a timely basis;
g) develop a position description for the CEO and select and appoint the CEO and senior management, review their performance and approve their compensation;
h) develop appropriate succession management policies for the CEO and senior management of the Company;
i) provide advice and counsel to CEO and senior management;
j) assess the effectiveness in fulfilling its own responsibilities, including those of its committees and individual directors;
k) provide for an orientation program for new directors and ensure periodic presentations from senior management on strategic issues relevant to the business and affairs of the Company;
l) maintain a culture of integrity including adopt and monitor compliance with the Code of Business Conduct and Ethics, setting the ethical tone for the Company and its management and employees;
m) ensure that an external communications policy is in place and that the Company has procedures for receiving and responding to feedback from stakeholders;
n) monitor compliance with applicable legal and regulatory requirements;
o) approve, on an annual basis, the composition of Board Committees, the respective Chairs and the mandates of such Committees; and
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p) receive, on an annual basis, a report from each Committee Chair regarding fulfillment of such Committee’s mandate duties.
5. RESPONSIBILITIES AND ROLES OF COMMITTEES OF THE BOARD
- Unless otherwise determined by the Board, the respective responsibilities of the Board Committees will be as set out in their Mandates.
6. TERMS OF REFERENCE FOR THE CHAIR OF THE BOARD
- On an annual basis, the Board will appoint a Chair from among its independent members to serve in a non-executive capacity.
- The Chair is responsible for overseeing, managing and assisting the Board in fulfilling its duties in an effective manner, independent of management. Responsibilities include:
- a) to chair Board meetings and annual and special meetings of shareholders;
- b) to organize regularly scheduled board meetings and to participate in the preparation of the agenda of each meeting;
- c) to monitor the work of the committees of the Board; and
- d) to ensure that an appropriate information package is provided to each director in advance of each meeting.
7. TERMS OF REFERENCE FOR THE CHAIRS OF COMMITTEES
- The chair is responsible for ensuring the committee functions in a manner that is independent of management, including managing meeting schedules, chairing meetings of the committee, acting as liaison between senior management and the committee and providing advice on appropriate matters. The committee chair shall set the agendas for meetings of the committee. The Chair shall report on the significant matters considered at a committee meeting at the next Board of Directors meeting.
8. RESOURCES
- The Board and its committees shall have the authority to retain appropriate legal, accounting and other consultants and advisors to assist it in fulfilling its responsibilities, as they deem necessary. The Company shall provide appropriate funding, as determined by the Board, for the services of any such advisors. The Chair of the Board shall be kept informed of any advisors retained.
9. SHAREHOLDER FEEDBACK
- The Board will develop measures for receiving feedback from shareholders with respect to individual queries, comments or suggestions. Shareholder comments, where appropriate, are brought to the attention of the Board and are included in its deliberations.
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